Question

Matterhorn, Inc. had the following sales for the past six months. Matterhorn collects its credit sales​ 30% in the month of​ sale, 60% one month after the​ sale, and​ 10% two months after the sale. Cash Sales Credit Sales January ​$50,000 ​ $50,000 February ​$70,000 ​$110,000 March ​$55,000 ​ $95,000April ​$78,000 ​$130,000 May ​$80,000 ​$105,000 June ​$75,000 ​$148,0001. What are Matterhorn's total cash receipts for the month of March?

Answer 1

$154,500

Step-by-step explanation:

The computation of the total cash receipts for march month is shown below:

Cash sales = $55,000

Credit sales would be

= March Credit sales × collection percentage + February credit sales × following month collection percentage + January credit sales × second following month collection percentage

= $95,000 × 30% + 110,000 × 60% + $50,000 × 10%

= $28,500 + $66,000 + $5,000

= $99,500

So, the total cash receipts would be

= $55,000 + $99,500

= $154,500